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The Role of Business Development at a Startup

The title of business development (BD) is becoming more and more common in startups. The irony, not many folks know what it is. It’s become the catch-all term, a ubiquitous phrase depending on whom you talk to – which of course contributes to the confusion. Frankly, it’s a tough thing to articulate.

Typically, the function of BD can include a variety of activities like strategic partnerships, content licensing, product distributions, monetization, and sometimes acquisitions. But, it varies greatly depending on the size and type of startup.

For example, BD at Seesmic was very focused on our platform and growing our userbase through 3rd party integrations. At Moz, it’s all about product distribution, strategic data partnerships, and monetization through our API. The day to day is drastically different.

A few years back, Seth Godin wrote a great post on BD, complete with tactical recommendations and examples (outside of startups) of BD in the wild. Here’s a few:

The Princeton Review built a huge test prep business, but only by licensing their brand to a series of books which did the lion’s share of their marketing for them.

Starbucks licenses their name to a maker of ice cream and generates millions in royalties.

Best Buy offers extended warranties on appliances you buy. They don’t provide the warranty, of course, a business development person did a deal with an insurance/service company to do it and they share the profit.

Simple enough.

A more relevant example in the technology industry would be something like Foursquare partnering with AMEX to provide rewards for check-ins or Twitter partnering with Gnip to license their firehose.

Extracting from all of those examples, in it’s simplest form, BD can be described as connecting similar businesses to similar goals.

But that’s overly simplified. Digging in a bit deeper, I’ve found that BD at startups can be distilled down to 2 primary responsibilities.

1) Filtering The kryptonite for any startup is a lack of focus. Regardless of your size or scale, you’re likely to receive endless requests to “partner”. As cool as that sounds, 9 times out of 10, it’s likely not going to be beneficial. The majority of people don’t do their research or take the time to really understand the businesses that they’re looking to partner with. As a BD, one of your primary roles is knowing how to sniff out the requests that are going to derail you from your mission and spot the ones that can take your business to the next level. Likewise, the BD plays the role of the connector for the requests that make it through the filter – connecting the right people together and driving a deal through to completion.

2) Building BD at startups is based around company goals. Goals can be specific things like building a platform of 3rd party apps (in the case of Seesmic) or broader things like making check-ins derive real world value (in the case of Foursquare). In terms of execution, the thought process is the same. That goal is the finish line, and the role of BD is to fill the gap in the middle. The gap is filled by determining which companies can help your startup achieve your goal and most importantly, how can you help bring them closer to their goals. If the latter isn’t satisfied, then it’s a deal that shouldn’t be done. Once you determine the companies that fulfill both, the building begins. Looking into the Foursquare example a bit deeper, the goal of Foursquare was to derive real world value from their check-ins. The goal of Amex was to drive visibility to a large base and to increase the value for current cardholders. Both sides were satisfied, and a deal was born. The tactical work is the in-between.

Some companies lend themselves very well to BD, others don’t. In any setting, a good BD is a strategic thinker, someone that’s well-versed in technology, precise in their execution, driven by data and gifted in building and maintaining relationships.

P.S. Want to learn more about Business Development at a startup? Check out my course, it’s $10 off with this link.

 
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